Dowell Company reported the following carrying amount of assets and liabilities at year-end: Property Plant and...

 

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Dowell Company reported the following carrying amount of assets and liabilities at year-end: Property Plant and equipment Inventory Trade receivables Trade payables Cash The value for tax purposes for property and for plant and equipment was P7,000,000 and P4,000,000, respectively. the entity has made a provision for inventory obsolescence of P2,000,000 which is not allowable for tax purposes. Further, an impairment loss against trade receivables of P1,000,000 has been made. This charge will not be allowed in the current year for tax purposes. The tax rate is 30%. What amount should be reported as (1) deferred tax liability and (2) deferred tax asset at year-end? A. (1) 1,200,000; (2) 900,000 B. (1) 900,000; (2) 1,200,000 C. (1) 300,000; (2) 0 D. (1) 0; (2) 300,000 10,000,000 5,000,000 4,000,000 3,000,000 6,000,000 2,000,000 PROBLEM MM: JUICE KOHLOURD Company is in the first year of operations and reported pretax accounting income of P4,000,000. The entity provided the following information for the first year: Premium on life insurance of key officer Depreciation on tax return in excess of book depreciation Interest on municipal bonds Warranty expense Actual warranty repairs Bad debt expense Ending balance in allowance for bad debts Rent received in advance that will be recognized evenly over the next three years Income tax rate is 30%. What is the current tax expense for the first year? A. 1,215,000 B. 1,260,000 C. 1,320,000 D. 1,335,000 100,000 200,000 50,000 40,000 30,000 60,000 40,000 300,000 Dowell Company reported the following carrying amount of assets and liabilities at year-end: Property Plant and equipment Inventory Trade receivables Trade payables Cash The value for tax purposes for property and for plant and equipment was P7,000,000 and P4,000,000, respectively. the entity has made a provision for inventory obsolescence of P2,000,000 which is not allowable for tax purposes. Further, an impairment loss against trade receivables of P1,000,000 has been made. This charge will not be allowed in the current year for tax purposes. The tax rate is 30%. What amount should be reported as (1) deferred tax liability and (2) deferred tax asset at year-end? A. (1) 1,200,000; (2) 900,000 B. (1) 900,000; (2) 1,200,000 C. (1) 300,000; (2) 0 D. (1) 0; (2) 300,000 10,000,000 5,000,000 4,000,000 3,000,000 6,000,000 2,000,000 PROBLEM MM: JUICE KOHLOURD Company is in the first year of operations and reported pretax accounting income of P4,000,000. The entity provided the following information for the first year: Premium on life insurance of key officer Depreciation on tax return in excess of book depreciation Interest on municipal bonds Warranty expense Actual warranty repairs Bad debt expense Ending balance in allowance for bad debts Rent received in advance that will be recognized evenly over the next three years Income tax rate is 30%. What is the current tax expense for the first year? A. 1,215,000 B. 1,260,000 C. 1,320,000 D. 1,335,000 100,000 200,000 50,000 40,000 30,000 60,000 40,000 300,000

Answer rating: 100% (QA)

60 Answer is A 1 1200000 2 900000 Deferred tax liability Book purpose Tax purpose Timing differ... View the full answer